Botwsana - MIC Grant to Support PEEPA in Improving …€¦ · · 2014-07-02CEO Chief Executive...

AFRICAN DEVELOPMENT BANK

PROJECT : MIC GRANT TO SUPPORT PEEPA IN IMPROVING PRIVATE

SECTOR PARTICIPATION IN THE DELIVERY OF PUBLIC

INFRASTRUCTURE AND SERVICES

COUNTRY : REPUBLIC OF BOTSWANA - Public Enterprises Evaluation and

Privatization Agency (PEEPA)

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APPRAISAL REPORT

Date: June 2010

Appraisal Team

Team Leader:

Team Members:

Sector Manager:

Sector Director:

Regional Director:

Christian Lim, Senior Private Sector Development Specialist,

OSGE.2

Carlos Mollinedo, Senior Macro Economist, OSGE.2

Achraf Tarsim, Economist Consultant, OSGE.2

Marlène Kanga, OSGE.2

Gabriel Negatu, OSGE

Abdirahman Beileh, ORSA

Peer Reviewers

Kate Tench, Technical Advisor, OSGE

Melanie Xuereb-De-Prunele, Senior Country Economist, ORSB

Abayomi Babalola, Transport Engineer, OPSM.3

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TABLE OF CONTENTS

LIST OF TABLES………………………………………………………………………....……ii

LIST OF ANNEXES………………………………………………………………………..…..ii

CURRENCY…………………………………………………………...................................... ii

GOVERNMENT FISCAL YEAR……………………………………………………….…… . ii

LIST OF ABBREVIATIONS AND ACRONYM……………………………………………...iii

RESULTS BASE LOGICAL FRAMEWORK……………………………………………… iv

EXECUTIVE SUMMARY ........................................................................................................ 1

1. INTRODUCTION .............................................................................................................. 2

2. PRIVATIZATION IN THE GOVERNMENT‟S AGENDA.............................................. 2

3. PEEPA‟s KEY FEATURES ............................................................................................... 3

3.1. LEGAL AND INSTITUTIONAL FRAMEWORK ....................................................................... 3

3.2. GOVERNANCE AND ORGANIZATION ................................................................................. 4

3.3. ACHIEVEMENTS AND PEEPA‟S BUSINESS PLAN ............................................................... 4

3.4. PRELIMINARY SKILLS AUDIT ............................................................................................ 6

4. PROJECT DESCRIPTION ................................................................................................. 6

4.1. PROJECT OBJECTIVE ......................................................................................................... 6

4.2. STRATEGIC ALIGNMENT ................................................................................................... 7

4.3. PROJECT JUSTIFICATION ................................................................................................... 7

4.4. INPUT AND ACTIVITIES ..................................................................................................... 8

4.5. RISKS AND MITIGATION MEASURES ................................................................................. 9

5. COST AND FINANCIAL PLAN ..................................................................................... 10

6. PROCUREMENT ............................................................................................................. 11

6.1. PROCUREMENT ARRANGEMENTS ................................................................................... 11

6.2. PROCUREMENT PLAN ..................................................................................................... 11

7. FINANCIAL MANAGEMENT ....................................................................................... 12

7.1. DISBURSEMENTS ............................................................................................................ 12

7.2. FINANCIAL REPORTING ARRANGEMENTS ....................................................................... 12

7.3. LETTER OF AGREEMENT ................................................................................................. 12

8. IMPLEMENTATION ....................................................................................................... 12

8.1. EXECUTING AGENCY ...................................................................................................... 12

8.2. REPORTING AND SUPERVISION ....................................................................................... 13

8.3. INDICATIVE WORK PLAN ................................................................................................ 13

9. CONCLUSION AND RECOMMENDATION ................................................................ 14

9.1. CONCLUSION .................................................................................................................. 14

9.2. RECOMMENDATION ........................................................................................................ 14

ANNEXES……………………………………………………….……………………………15

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LIST OF TABLES

Table 1 Cost estimate and financing plan

Table 2 Work plan

LISTE OF ANNEXES

Annex 1 Government‟s MIC grant request

Annex 2 MIC grant request form

Annex 3 Terms of Reference (1)



Annex 6

Annex 7

Detailed work plan (indicative)

PEEPA Organizational Structure

Annex 8 Preliminary skills audit (summary)

Annex 9 Preliminary skills audit (detailed table)

Annex 10 Project procurement arrangements

Annex 11 Privatization transactions‟ status

Annex 12 Botswana ADB active portfolio

Annex 13 Botswana Country Profile

Annex 14 Map of Botswana

CURRENCY

Currency Equivalents

(June, 2010)

1 UA = 10.36 BWP

1 UA = 1.47 USD

1 US$ = 7.03 BWP

GOVERNMENT FISCAL YEAR

April 1- March 31

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LIST OF ABBREVIATIONS AND ACRONYM

AfDB / ADF African Development Bank / African Development Fund

BIUST Botswana International University of Science and Technology

BPC Botswana Power Corporation

BPL Botswana Pty Limited

BTC Botswana Telecommunications Corporation

BWP Botswana Pula

CEO Chief Executive Officer

CSP Country Strategy Paper

CTO Central Transport Organization

EDSL Economic Diversification Support Loan

GDP Gross Domestic Product

GECL Legal Department of the African Development Bank

GEMVAS Government Employee Motor Vehicle Advance Scheme

GoB Government of Botswana

GLIF Residential Property Advance Scheme

ICB International Competitive Bidding

MEWT Ministries of Environment, Wildlife and Tourism

MIC Middle Income Country

NDB National Development Bank

NCP National Competitive Bidding

NDP National Development Plan 10

OSGE Governance, Economic and Financial Reforms Department of AfDB

PEEPA Public Enterprises Evaluation and Privatization Agency

PPADA Public Procurement Assets and Disposal

PPP Public-Private Partnerships

TOR Terms of Reference

UA Unit of Account

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RESULTS BASED LOGICAL FRAMEWORK

HIERARCHY OF

OBJECTIVES EXPECTED RESULTS

REACH/

BENEFICIARIES

PERFORMANCE INDICATORS,

SOURCE, PERIODICITY

INDICATIVE TARGETS

AND TIME FRAME RISKS, MITIGATION MEASURES

GOAL:

Diversify economy

through private

sector involvement

in delivery of

public

infrastructure and

services

IMPACT:

Botswana successfully

implements its privatization

agenda

Government of

Botswana

Domestic

entrepreneurs and

investors

Users of public

services

Timely completion of

implementation of projects in the

Privatization Master Plan (currently

being updated)

Source: PEEPA

70% of transactions are

completed according to

schedule (to be updated with

the new Privatization Master

Plan)

Risk:

Opposition from Line Ministries, public

enterprises and services departments

Weakness of high level political support to

implement transactions.

Mitigation:

The recent financial crisis has highlighted the

need to accelerate privatization to achieve

sustainable fiscal position

PEEPA undertakes policy dialogue on

importance of privatization and awareness

raising on benefits of privatization to

Botswana‟s economy primarily to policy

makers and relevant stakeholders involved in

decision making

OBJECTIVES:

Build capacity in

PEEPA

OUTCOMES:

Two private sector

participation transactions

strategies completed

Privatization skills

strengthened

Future transactions lead to

citizen participation

All Ministries that

have privatization

projects

PEEPA

Domestic

entrepreneurs and

investors

Privatization strategy for BPC

approved and maintenance of

Government building transaction

completed

Domestic entrepreneurs take part in

the consortium of the winning

company

Domestic entrepreneurs provide

services to the winning company

Domestic savings are invested in

project implementation

Private sector participation

strategy for BPC approved by

December 2011

Private sector participation in

maintenance of Government

buildings completed by March

2012

Yes or No1

Yes or No

Yes or No

Risk:

Weakness of high level political support to

implement transactions

Mitigation:

High level of political support has been

expressed for these transactions, including in

the concerned line Ministries. The recent

financial crisis has highlighted the need to

accelerate privatization to achieve sustainable

fiscal position. Partners, which are heavily

investing in the power sector, also support

these reforms.

Policy dialogue on importance of privatization

and awareness raising on benefits to relevant

ministries and public enterprises will be

conducted with the support of the Consultants.

1 It is impossible to determine an acceptable level of citizen participation, because it is highly industry and country dependent. This indicator is therefore a Yes/No indicator.

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HIERARCHY OF

OBJECTIVES EXPECTED RESULTS

REACH/

BENEFICIARIES

PERFORMANCE INDICATORS,

SOURCE, PERIODICITY

INDICATIVE TARGETS

AND TIME FRAME RISKS, MITIGATION MEASURES

INPUTS

UA 450,000 for

advisory and

training services to

prepare two private

sector participation

transactions

UA 60,000

Consulting services

to develop a citizen

empowerment

framework and

guidelines for

privatization

transactions

UA 122,000 for the

secondment of staff

to an experienced

sister privatization

agency

UA „000

AfDB 600

PEEPA 32

Total 632

OUTPUTS

A. Strategy document for

private sector participation in

BPC

B. Strategy and tender

documents for private sector

participation in the

maintenance of government

buildings including, hospitals,

and schools

C. On-the-job training on the

development and

implementation of divestiture

and concession transactions,

tendering, evaluation and

negotiation of offers and the

regulation and monitoring of

post privatization transactions

D. Citizen empowerment

policy in privatization

PEEPA

Ministry of Minerals,

Energy and Water

Resources

Ministry of

Infrastructure,

Science and

Technology and

DBES

Ministry of Health

Ministry of

Education and Skills

Development

Completion of the two privatization

transaction strategy

Completion of tender documents for

securing private sector service

providers for the maintenance of

government buildings

Number of man / hours of in-class

training

Completion of training manuals

Completion of citizen empowerment

Framework

Source: PEEPA

Strategy documentation ready

by March 2011

Tender documentation ready by

March 2011

At least 480 man/hours trained

by 2012

Framework documentation

ready by March 2011

Citizen empowerment

framework completed by 2012

Risk:

Transaction Consultants do not dedicate

enough resources to training

Information available on assets and services

for privatization are insufficient

Mitigation:

The ToRs explicitly describe training as a key

deliverable and payment is also based on

performance on this dimension

Available data is provided to prospective

consultants during the selection process and

the contract make them responsible for

obtaining missing information necessary to

complete the assignment, provided that the

Government provides reasonable access to

existing information

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EXECUTIVE SUMMARY

1. The Government of Botswana wishes to further advance the implementation of its

privatization program, a key component of its diversification agenda. Economic

diversification has been a central objective of Botswana‟s development policy, in recognition of

the excessive dependence of Botswana‟s economy on diamonds. In 2009, the African

Development Bank supported this objective by providing a US$ 1.5bn Economic Diversification

Support Loan (EDSL). The loan supported reforms designed in particular to promote “the

development of a vibrant private sector including privatization” (component one).

2. The objective of the proposed project is to build capacity in the Public Enterprises

Evaluation and Privatization Agency (PEEPA). PEEPA is mandated to take the leadership in

the implementation of the privatization program. The project is an important complement to the

privatization-related reforms included in the EDSL.

3. The project includes the following activities: (i) Preparing options analyses and tender

documents for two privatization transactions; (ii) providing on-the-job training based on these

two transactions; (iii) improving practical skills of PEEPA staff through secondment to

experienced sister institutions; (iv) producing a policy for Citizen Economic Empowerment in

privatization projects. The project focuses on on-the-job training on actual transactions, to

complement the overall adequate academic qualifications of PEEPA staff. It will be implemented

during the period 2010-2012.

4. The project will contribute to accelerating the implementation of the privatization

program by building practical privatization skills and through the demonstration effect of

delivering two high priority transactions. The Citizen Economic Empowerment Policy will also

make a major contribution to improving economic opportunities for domestic businesses and

investors.

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1. INTRODUCTION

1.1 The Government of Botswana wishes to accelerate the implementation of its

Privatization Program which ranks high on its diversification agenda. The future success of

the economy is linked to Botswana‟s ability to diversify the economy and develop new engines

of growth beyond diamond mining and the public sector, which still represent together about

50% of GDP; public spending represents about 40% of GDP (one of the largest in Africa), and

employment by the government and its paratsatals reaches 47%. As such, privatization has been

identified as one of the reforms necessary to transform the Botswana economy from a public

sector-led economy to a private sector-led economy. The Government‟s privatization policy aims

at transferring commercially viable activities to the private sector, thus reducing its financial and

administrative burden, improving service delivery, facilitating citizen empowerment and

encouraging investment, entrepreneurship and job creation.

1.2 The Public Enterprises Evaluation and Privatization Agency (PEEPA), as an

advisor and in charge of the implementation of privatizations, plays a central role in the

execution of the Privatization Program. PEEPA serves as an advisor and executive agency for

all Ministries involved in the privatization program. However, given the short history of

privatization in Botswana, most PEEPA staff has limited experience in privatization.

1.3 The objective of the proposed project is to build capacity in PEEPA through

transaction support, training and assistance in preparing a citizen empowerment policy.

The project will provide advisory services to develop a strategy for private sector participation in

the incumbent power company and in the maintenance of Government buildings, hospitals and

schools. The technical assistance will come with provision of on the job training, and

secondment training. It will also include a citizen economic participation policy for future

transactions.

Box 1: Defining Privatization, Divestiture and PPP Privatization is defined in the Privatization Policy for Botswana, Government paper No. 1 of 2000. It is understood

in its broadest sense, as it includes, not only the transfer of ownership of public enterprises to private buyers but also

“all measures and policies aimed at strengthening the role of the private sector in the economy”. In practice and for

the purpose of this project, privatization is defined as all the methods for private participation in the provision of

public goods and services, including the divestiture of assets and operations of public enterprises, the

commercialization and / or contracting out of public services, and private sector provision of infrastructure and

services through Public-Private Partnerships (PPP). In order to avoid confusion, in this document, the full transfer

of ownership of assets and provision of services from the public to the private sector is referred to by “divestiture”

rather than “privatization”. Privatization is used in its broad sense only. Similarly, “PPP” is used in a narrow

meaning, to describe the provision of green field infrastructure and associated services by a private sponsor.

2. PRIVATIZATION IN THE GOVERNMENT’S AGENDA

2.1 The Privatization Policy for Botswana, launched in 2000, is a key component of the

broader economic diversification policy. The economic diversification strategy, in line with

Vision 2016 and the National Development Plan 10 (2010-2016), aims at achieving sustainable

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development, transforming the economy from a public-sector driven to a private-sector led

market one, and promoting an environment that supports non-mining private sector development

initiatives.

2.2 The Government’s key objectives for establishing a privatization program include:

Achieving much needed efficiencies in delivery of public services;

Relieving the Government of the financial and administrative burden of undertaking

and maintaining a constantly expanding network of services and investments in

infrastructure;

Reduce the size of the public sector, creating space for private sector to be involved in

driving the growth of the economy and stimulating entrepreneurship;

Attracting FDI and technology transfer;

Broadening and deepening the capital market through providing investment

opportunities in privatized companies.

3. PEEPA’s KEY FEATURES

3.1. LEGAL AND INSTITUTIONAL FRAMEWORK

3.1.1 The founding framework for the Privatization Program is the Privatization Policy

for Botswana of 2000 with the key objective of the Policy being to improve efficiency and

productivity in the delivery of public infrastructure and services through increased involvement

of the private sector. The Public Enterprises Evaluation and Privatization Agency (PEEPA) was

established in 2001 as an autonomous agency of Government, to advice on all aspects of

privatization and commercialization.

3.1.2 Among other things, PEEPA mandate is to advise on policy formulation, strategies

and implementation plans that facilitate private sector involvement in public sector

functions. It does so by undertaking sectoral, public services and enterprise studies and assisting

sector ministries and Government departments in delivering approved privatization transactions.

The other responsibilities of PEEPA include monitoring the performance of parastatals and their

Boards as well as assisting with the appointment of their board members.

3.1.3 Legislatively, there is no overarching law for privatization activities in Botswana

and any legal requirements are handled on a case by case basis. Transactions involving the

sale or disposal of shares or assets, or activities involving the procurement of goods and services

to facilitate transactions are implemented in accordance with the Public Procurement of Assets

and Disposal (PPADA) of Botswana.

3.1.4 Implementation of the Policy is guided by the Privatization Master Plan of 2005

which indicates those public enterprises and services suitable for privatization and those that

require to be restructured prior to consideration for privatization, as well as an action plan, the

processes to be followed and the roles and responsibilities of relevant parties that would be

involved in the processes. At that time, comprehensive divestiture and outsourcing manuals were

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developed. The privatization agenda was reinforced in 2009 through the adoption of the PPP

Policy and Implementation Framework (Presidential Directive 18-B, 2009) that created a PPP

unit within the MFDP to promote PPP initiatives, in close coordination with PEEPA.

3.1.5 In November 2008, in addition to its original advisory mandate mentioned above,

PEEPA was mandated by an executive decision to take leadership in the implementation of

the privatization program. Cabinet has recently endorsed this decision. PEEPA becomes the

single point of accountability for the overall privatization program and can now drive the

privatization process. However, approval of the critical stages of the transaction process, mainly

for each transaction the privatization strategy, the bidding documents and the selection of the

private partner - still remain with the Cabinet.

3.2. GOVERNANCE AND ORGANIZATION

3.2.1 PEEPA is established as a Company Limited by Guarantee with the Government of

the Republic of Botswana as the sole shareholder. The Board is established and governed by

the Memorandum and Articles of Association of PEEPA and the Companies Act. The PEEPA

Board comprises of 9 members appointed by the Minister of Finance and Development Planning

and have a tenure of four years, renewable for another period of four years. The Ministry of

Finance and Development Planning, being the parent ministry, is automatically represented on

the Board to ensure continuity. Other members are drawn mainly from the private sector.

3.2.2 The Chief Executive Officer (CEO), who is not a member of the Board, is appointed

by the Board, subsequent to the approval of the Minister of Finance and Cabinet. Operational, the CEO is supported by a Deputy CEO and the staff members fall under two

categories, namely under the core departments and the support services as outlined in Annex 6.

Under the core departments, the (i) Restructuring and Privatization Department deals with

advising on the transfer of ownership or management of public enterprises to the private sector

through various methods such as divestiture, leasing and management contracts, and PPPs, (ii)

the Outsourcing Department deals with the transfer of non-core services currently being handled

by Government to the private sector and (iii) the Performance Monitoring Department which

deals with monitoring the performance of public entities and their boards.

3.2.3 PEEPA is committed to best corporate governance principles and practices and has

developed a comprehensive Corporate Governance Framework to enhance organizational

performance. The Framework consists of a Performance Contract (Shareholder Compact), a

Board Charter and a Board Evaluation/Appraisal System, among other elements, and is being

considered by the Ministry of Finance and Development Planning.

3.3. ACHIEVEMENTS AND PEEPA’S BUSINESS PLAN

3.3.1 To date, the achievements under the program surround the outsourcing/contracting

out of public services as well as implementation of a few PPP projects. With respect to

divestiture, key achievements involve the development of transaction strategies for the airlines

company, the incumbent telecommunication company, the National Development Bank and the

Government ranch. Implementation is placed with the line Ministries.

5

3.3.2 Though milder methods of privatization, such as PPPs and outsourcing of services

have been achieved, key challenges remain to divestiture, as evidenced by the absence of

completed divestiture since the approval of the privatization policy in 2000. These challenges

include the following:

- Though political will is significant2, economic incentives have so far not been in favor of

divestiture, as the Government could still benefit for at least 15 years from substantial

diamond revenues which allow it to finance and bail out if necessary the companies

targeted for divestiture;

- The institutional framework centralized the advisory support with PEEPA, while

decentralizing implementation of transactions to line ministries, which in some cases can

weaken the incentive to implement the privatizations;

- There has been a lack of clarity in the initial design of the projects, which led to

difficulties in negotiations that could not be overcome;

- More communication is needed at a political level to identify the impacts of the

divestitures and reach agreement on acceptable mitigation measures;

- The strategic choice of target companies was not always optimal. For instance, Air

Botswana, being a national flag carrier, was in this regard a difficult company to

privatize.

3.3.3 Economic incentives have become more favorable since the financial crisis, as the

subsequent slump in diamond prices has highlighted the fragility of diamond revenues. This has concretely resulted in a reduction of the funding of Government agencies and public

enterprises, and created a renewed momentum for privatization, including divestiture.

3.3.4 As explained above, PEEPA’s mandate has been revised to enable it to take

leadership in the implementation of the privatization program. Though the decisions at the

critical stages of the transaction process still remain with the Cabinet, PEEPA is now empowered

to drive the technical preparation of the transactions.

3.3.5 This project will enhance the capacity to identify upfront critical constraints, and

manage them including through better communication.

3.3.6 PEEPA is developing a Priority Privatization Program for NDP 10, which will

update the current Privatization Master Plan and take into account the past experiences in

identifying public enterprises to be divested in priority. This Priority Program should further

enhance the delivery of privatization by attaining agreement and commitment of key

stakeholders to this Program and will form the basis for measuring PEEPA‟s performance.

PEEPA‟s 2010/11 Business Plan will therefore be based on this priority privatization program.

2 Beyond declarations of intention, this is demonstrated by the fact that the privatization of Air Botswana was

approved three times by the Cabinet, after a relatively short preparation time of two years on average. Each time

however, the transaction was canceled for various reasons, which included unfavorable market conditions due to the

9/11 attacks, pulling out of the preferred bidder at the last minute because of changes in the strategy of the buyer,

disagreement on politically sensitive aspects of the business plan proposed by the buyer, such as the removal of the

national flag.

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3.4. PRELIMINARY SKILLS AUDIT

3.4.1 PEEPA has 33 staff. This includes 8 persons at management / senior level, 7 analysts

and 18 from corporate services, including finance and administration. The preliminary skills

audit (Annexes 7 and 8) provides a detailed breakdown.

3.4.2 Privatization experiences are scarce in Botswana, which has prompted PEEPA to

largely rely so far on various forms of international expertise. This is the result of

privatization being a relatively new public sector reform initiative in Botswana. A number of

PEEPA staff are international long term consultants. International Consultants are also recruited

on a transaction basis. As a result, PEEPA has been operating under a project management

approach with a minimal core staff group that procures and supervises consultants or sector

experts that offer advisory support and expertise. The core skills and competencies that have

hitherto been required in PEEPA have therefore evolved around project management, financial

analysis, procurement, negotiations and communication and advocacy skills.

3.4.3 PEEPA has now taken the strategic option to reduce the number of consultants

being used on assignments and carry-out more of the work in-house. This is expected to

bring the following benefits: cost reduction, increased flexibility, and improved quality control of

consultants, improved contribution of PEEPA in the stakeholder dialogue. The success of this

strategy hinges on PEEPA enhancing the technical capacity of its staff, in particular on business

case assessments and business valuation.

3.4.4 The preliminary skills audit indicates that PEEPA’s skills base would be best

enhanced through on-the-job training on real privatization cases and through

secondments. Indeed, on the one hand, the educational background of PEEPA staff seems

adequate. All managers hold an advanced business degree and all analysts hold Bachelor‟s

degree in a relevant field, mostly economics, business and finance. In addition, the total of prior

years of experience working in parastatals is substantial, with 9 years on average at management

level and 3 at analyst level. However, on the other hand experience of privatization structuring

and analysis prior to joining PEEPA is very limited.

4. PROJECT DESCRIPTION

4.1. PROJECT OBJECTIVE

4.1.1 The overall objective of the project is to build capacity in PEEPA to support the

implementation of the Government’s agenda for private participation in the delivery of

public services. Specific activities include: (i) Preparing two privatization transactions; (ii)

providing on-the-job training based on these two transactions; (iii) improving technical skills of

PEEPA staff through practical training including a secondment program to advanced sister

institutions in other countries; (iv) completing a policy for citizen economic empowerment in

privatization projects, to ensure that privatization translates into actual opportunities for domestic

businesses and investors.

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4.2. STRATEGIC ALIGNMENT

4.2.1 The proposed technical assistance program:

Aligns with the objectives of the MIC Trust Fund. It fits fit into two of the priority

activities identified in the Revised Guidelines for the Administration and Utilization of

the Technical Assistance Fund for Middle Income Countries (ADB/BD/WP/2005/90),

namely: (i) capacity building and institutional building and (ii) promotion of the

private sector.

Serves to implement pillar I of the Bank’s Country Strategy Paper 2009-2013,

which consists in “supporting actions to expand private sector investment”. In

particular, the CSP indicates that the Bank will “influence policy reforms that focus on

promoting privatization and private-public partnerships”.

Deepens the EDSL reform program, under the component one “Promoting the

private sector as the mainstray of economic growth”. In particular, the reforms in this

component aim to promote “the development of a vibrant private sector including

privatization”.

4.3. PROJECT JUSTIFICATION

4.3.1 The proposed technical assistance will:

Support Botswana’s objective of diversification of the economy through private

sector development as stated in the National Development Plan 10 and the

Privatization Policy (Government Paper No. 1 of 2000 and Presidential directive

2009). The two transactions supported have been identified as priorities in the

Privatization Master Plan. In addition, one of the key concerns raised about the

privatizations completed so far is that they have not resulted in significant

opportunities for citizen participation. The Citizen Economic Empowerment Policy

will set out clear principles and strategies to achieve so.

Provide essential privatization skills to PEEPA through on-the-job learning on

real cases. PEEPA staff will have the opportunity to learn and apply privatization

frameworks and methodologies. In particular, PEEPA will be better equipped to

address the technical, social and political challenges to privatization.

Promote and enhance awareness of privatization and PPPs. If successfully

completed, the two transactions supported by this project, by their demonstration

effect, will help catalyze future transactions. In addition, the implementation of the

above mentioned projects will create an opportunity for PEEPA to engage more with

various stakeholders. It is hoped that the projects will stimulate general policy

dialogue as well as awareness raising on the importance and benefits of privatization

to Botswana‟s economy primarily to policy makers and relevant stakeholders involved

in decision making. The dialogue process and the transparent implementation and

delivery of the projects would help enhance trust between PEEPA and key

stakeholders.

Support the implementation of the privatization component of the reform

program of the EDSL.

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4.4. INPUT AND ACTIVITIES

4.4.1 Activities are to be completed by three consulting firms and through a secondment plan

prepared and implemented by PEEPA.

COMPONENT A: STRATEGY FOR PRIVATE SECTOR PARTICIPATION IN BPC AND TRAINING

4.4.2 Consulting Firm A will be recruited to prepare a strategy for the involvement of the

private sector in the operations and service provision by BPC to improve efficiency and

productivity in power provision and to provide training. Because the transaction is complex

and the approval of the strategy involves extensive consultations, it is expected that the actual

tender could take place 8 months or more after the proposition of the strategy. The tender

documents are therefore not included in this project. The preparation of the strategy will involve

a thorough due diligence, a market analysis, a valuation, an assessment of investor interest, as

needed recommendations for restructuring and reforms at the company level and at the

environment level, an analysis of options for private sector involvement including a

recommendation, a roadmap for implementation of the strategy. It will also include consultations

with relevant stakeholders. The training component will aim at transferring to PEEPA the non-

sector specific skills needed to prepare strategies similar to that for BPC. It will cover all aspects

of the project cycle, from due diligence to options analysis and implementation plan

development. The method will be based on a mix of in-class training on the broad principles and

on-the-job training through direct participation of PEEPA staff in the key steps of the

assignment, with a view to apply on the development of the strategy for BPC and future project,

the knowledge acquired in class.

4.4.3 The terms of reference for Consulting Firm A are outlined in Annex IV and the key

deliverables are a report on a private sector participation strategy for BPC, and training

including training manuals.

COMPONENT B: PRIVATE SECTOR PARTICIPATION IN THE MAINTENANCE OF GOVERNMENT

BUILDINGS AND TRAINING

4.4.4 Consulting Firm B will be recruited to prepare a strategy and tender documents for

the involvement of private sector participation in the maintenance of government

buildings, schools and hospitals, and to provide training. Because this transaction is much

less complex than the BPC one (no impact on the core mandate of a line Ministry and fewer

models for risk sharing), it is expected that the strategy would be approved rapidly and that

tendering would take place a few months after the preparation of the strategy. The tender

documents are therefore part of the same assignment. It is anticipated that the privatization will

take the form of a concession, with significant upfront investment to rehabilitate the facilities.

Other options will also be considered as deemed necessary, such as for instance lease, or sale and

lease back. As for BPC, the assignment will involve a thorough due diligence, a market analysis,

a valuation, an assessment of investor and operator interest, as needed recommendations for

restructuring and reforms at the company level and at the environment level, an analysis of

options for private sector participation including a recommendation, and implementation plan. It

9

will also include consultations with relevant stakeholders. The training component will aim at

transferring to PEEPA the non-sector specific skills needed to prepare privatization strategies for

assets similar to this assignment. It will cover all aspects of the project cycle, from due diligence

to options analysis and to the recommendation of implementation plans. The method will be

based on a mix of in-class training on the broad principles and on-the-job training through direct

participation of PEEPA staff in the key steps of the assignment, with a view to apply on the

assets covered by the project the knowledge acquired in class.

4.4.5 The terms of reference of Consulting Firm B are outlined in Annex V and the key

deliverables will be the Strategy Options Report and Tender documents for the private

sector participation in the maintenance of government buildings, and training including

training manuals.

COMPONENT C: CITIZEN ECONOMIC EMPOWERMENT STRATEGY FRAMEWORK FOR

PRIVATIZATION

4.4.6 Consulting firm C will be recruited to develop a Citizen Economic Empowerment

strategy framework specific to privatization transaction, to guide the involvement of

citizens in such transactions. The CEE policy will lay out principles for providing opportunities

for domestic entrepreneurs and business arising from privatization, through amongst others

preferential participation in the privatized companies, and access to sourcing from privatized

companies. The policy will include targeting methods, conditions and guidelines to ensure that

economic benefits outweigh the costs of distortions resulting from market intervention.

4.4.7 The terms of reference for Consulting Firm C are in Annex VI and the key

deliverable is a Citizen Economic Empowerment Strategy for implementation.

COMPONENT D: SECONDMENT TO EXPERIENCED SISTER INSTITUTIONS

4.4.8 During two years, three staff will be seconded each year to experienced sister

privatization agencies in other countries, to gain first-hand exposure to the final stages of the

privatization process – bid evaluation and negotiation and the actual implementation

privatization – transfer of assets, monitoring and evaluation, regulation. The secondees will be

fully part of the teams in the host institution and directly carry out the tasks to be learnt, with

support from a mentor. PEEPA has been requested to propose a secondement program for its

staff by selecting fields of expertise to develop as well as a list of sister institutions with solid

experience in the privatization domain.

4.5. RISKS AND MITIGATION MEASURES

4.5.1 The key risks to achieving the Outcomes of the project and the mitigation measure

are outlined in the Logical Framework. Political support has so far been significant but has

mainly achieved the mild forms of privatization, and not divestitures which is the most

10

challenging type of privatization. However, recently, the budget deficit triggered by the financial

crisis has highlighted the unsustainable level of public expenditures and increased the incentive

for Government to accelerate privatization. The proposal will assist Government to accelerate

privatization, and addresses these risks through providing demonstration projects, and improving

transaction design and communication

5. COST AND FINANCIAL PLAN

5.1 The total cost of the plan is estimated at UA 632,000, financed from the MIC Trust Fund

and the Government of Botswana (GoB). It is broken down as follows:-

Table 2- Costing and Financing Plan

5.2. The cost estimate is based on an extrapolation from similar projects, including Botswana

Telecom Communication, Air Botswana and NDB.

11

6. PROCUREMENT

6.1. PROCUREMENT ARRANGEMENTS

6.1.1 The procurement in relation to the Bank‟s contribution will be undertaken in accordance

with the Bank Group's “Rules and Procedures for the Use of Consultants” (May 2008) using the

relevant Bank Standard Bidding Documents. Detailed information on the procurement

arrangement for the current project is reported in annex 9.

6.1.2 The procurement of consultancy firms will be undertaken on the basis of a short list of 6

firms prepared by the PEEPA in compliance with Bank‟s rules of procedures and approved by

the Bank. The letter of invitation, including the TORs will also be approved by the Bank before

communication to the short-listed consultants. The selection method shall be Quality and Cost-

Based Selection (QCBS) which takes into account the quality of the proposal and the cost of the

services in the selection of the successful firm. Cost as a factor of selection shall be used

judiciously. The relative weight to be given to the quality and cost shall be determined for each

case depending on the nature of the assignment. The selection process shall include the following

steps:

(a) preparation of the TOR;

(b) preparation of cost estimate and the budget;

(c) advertising requests for expression of interest;

(d) preparation of the short list of consultants;

(e) preparation and issuance of the RFP;

(f) receipt of proposals;

(g) evaluation of technical proposals: consideration of quality;

(h) public opening of financial proposals;

(i) evaluation of financial proposal;

(j) final evaluation of quality and cost; and

(k) negotiations and award of the contract to the selected firm.

6.1.3 The contribution of the Republic of Botswana covers per diem and flights for its own

staff. Audit of the project will be conducted by the firm auditing PEEPA at no additional cost.

The Bank Terms of Reference for audit will be used for the audit of the project. The procurement

in relation to the contributions of Botswana will be undertaken using the procurement rules in

place in PEEPA.

6.2. PROCUREMENT PLAN

6.2.1 As part of the preparation of the project the Recipient shall prepare and, before signature

of the Financing Agreement, furnish to the Bank for its approval, a Procurement Plan acceptable

to the Bank setting forth: (a) the particular contracts for the goods, works, and/or services

required to carry out the project during the initial period of at least 18 months; (b) the proposed

methods for procurement of such contracts that are permitted under the Financing Agreement,

and (c) the related Bank review procedures. The Recipient shall update the Procurement Plan

12

annually or as needed throughout the duration of the project. The Borrower shall implement the

Procurement Plan in the manner in which it has been granted the approval by the Bank.

7. FINANCIAL MANAGEMENT

7.1. DISBURSEMENTS

7.1.1 The disbursement of the MIC grant can be done using the following methods:

Special Account method

Direct Payment method

Reimbursement method

7.1.2 The Special Account method will be the preferred method when possible. However,

administrative and regulatory difficulties have been experienced in previous projects in

Botswana with, on the one hand, obtaining comfort letters from commercial banks and, on the

other hand, opening a special account with the Central Bank or the Treasury. Other methods of

payment will therefore be used as appropriate.

7.1.3 The direct payment method will be used when there is no constraint on the turnaround

time for payment. The reimbursement method can also be used for accelerated payment if

needed and PEEPA has the necessary liquidity.

7.1.4 All disbursements will subject to the Bank‟s disbursement rules, in particular the rules on

suspension of disbursements.

7.2. FINANCIAL REPORTING ARRANGEMENTS

7.2.1 PEEPA will maintain independent accounts for the activities financed by MIC Trust Fund

in accordance with sound international accounting practices. An annual audit will be submitted

to the Bank no later than 180 days after the end of the financial year.

7.3. LETTER OF AGREEMENT

7.3.1 Following the approval of the request by the Bank, the Bank‟s Legal Department (GECL)

will prepare a Letter of Agreement using the format provided in Annex 3 of the Guidelines for

Administration and utilization of the Technical Assistance Fund for MIC.

8. IMPLEMENTATION

8.1. EXECUTING AGENCY

8.1.1 The Public Enterprises Evaluation and Privatization Agency (PEEPA) will be the

executing agency for the project and the CEO of PEEPA will be the Project Coordinator and

will take overall responsibility for final outcome of the project. He will form a Project Team that

13

will be responsible for the implementation of project activities. The Project Team will include

senior staff from the operational departments. It will also include a staff from Finance and

Administration, responsible for administrating the procurement, disbursement and financial

management related to the project. The Project Team will be lead by a Project Team Leader from

the senior management of PEEPA.

8.2. REPORTING AND SUPERVISION

8.2.1 The Board of Directors of PEEPA will provide strategic guidance to the project, in

particular with regards to its links with other Government entities, national developments and the

industry. It will follow up the overall implementation of the project.

8.2.2 The project will be supervised for the African Development Bank by a Task Manager

appointed by the Governance, Economic and Financial Reforms Department (OSGE).

Consulting Firms will report to the Project Team Leader of PEEPA.

8.2.3 The CEO of PEEPA will be responsible for the reporting to the Board of PEEPA and to

the African Development Bank regarding progress of the project. The reports delivered by the

Consulting Firms and the secondees will be shared with the African Development Bank for Non

Objection.

8.2.4 In addition, supervisions will be undertaken by the African Development Bank at an

average frequence of 1.5 missions per year during the implementation of the project. They will

be concluded by an aide-memoire jointly prepared by the Project Coordinator and the Bank‟s

Task Manager, summarizing progress - measured against the logical framework, highlighting

key issues and setting out actions to be taken. An independent audit will be conducted at the end

of the project and a completion report will be prepared by PEEPA within 2 months after the

closing of the project.

8.3. INDICATIVE WORK PLAN

8.3.1 The project will be carried out within 30 months from the approval of the request for

financing to the MIC Trust Fund (see summary in table 2 below and detailed work plan in annex

6).

Table 2 – Work Plan

Activity

9 10 11 12

Project preparation (incl. procurement)

Privatization strategy for BPC and training

Privatization strategy and tendering documents for Government buildings and training

Policy for Citizen economic empowerment

Secondment of staff

2010 2011 2012

S1 S2 S3 S4

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9. CONCLUSION AND RECOMMENDATION

9.1. CONCLUSION

9.1.1 Accelerating the implementation of Botswana’s Privatization Policy is critical to

diversify the economy by involving private sector participation. The successful

implementation of the Policy will boost the operations of the private sector while achieving the

objectives of improving efficiency in the delivery of services to the public, promoting both

domestic and foreign investment and the transfer of technology, assisting in deepening and

broadening the capital market, and enhancing citizen participation in the economy.

9.1.2 This project is designed to help PEEPA demonstrate results through delivering two

high priority privatizations, build core skills needed to accelerate the implementation of the

Privatization Policy. To achieve this, this project focuses on on-the-job training on actual

transactions, to complement the overall adequate academic qualifications of PEEPA staff.

9.1.3 Through the delivery of a Citizen Economic Empowerment Policy, the project will

also improve economic opportunities for Batswana in privatization projects. Future projects

will be designed to explicitly include this dimension so as to derive maximum benefits from

privatization for the domestic economy.

9.1.4 Finally, the project is an essential complement to the EDSL program, in that it

deepens one of its key components: “Promoting the private sector as the mainstray of economic

growth”. The reforms in this component aim to promote “the development of a vibrant private

sector including privatization”.

9.2. RECOMMENDATION

9.2.1 It is recommended that an amount not exceeding UA 600,000 be granted to PEEPA from

the resources of the MIC Trust Fund to undertake the project activities described hereto.

15

Annex 1 – GOVERNMENT’S MIC GRANT REQUEST

16

Annex 2 – MIC GRANT REQUEST FORM

19

Annex 3 - TERMS OF REFERENCE (1) FOR

ADVISORY SERVICES FOR DEVELOPMENT OF A STRATEGY FOR

INVOLVING PRIVATE SECTOR PARTICIPATION IN BOTSWANA POWER

CORPORATION

AND PRIVATIZATION TRAINING

1 INTRODUCTION

1.1 The Ministry of Minerals Energy and Water Resources (MMEWR) of Botswana

to identify the possible options available for private sector involvement in the Botswana

Power Corporation (BPC). MMEWR has requested the Public Enterprises, Evaluation

and Privatization Agency (PEEPA), the Government‟s advisor on privatization, to carry

out the required diagnostic review.

1.2 The review will be undertaken in accordance with the objectives of the

Privatization Policy of Botswana (Government Paper No. 1 of 2000), which seeks to

improve the efficiency, productivity and competitiveness of the public sector and the

economy as a whole through enhancing the role of the private sector in the economy. The

other objective through this involvement will be to attract private investment and

technology to grow the energy sector and the economy as a whole.

1.3 The objectives of this assignment are to produce a private sector participation

strategy for BPC and deliver training based on the BPC case. In addition, PEEPA will use

this transaction as support for providing on-the-job training to PEEPA staff on core

privatization skills illustrated by the BPC case.

2 BACKGROUND

2.1 The Botswana Power Corporation (BPC) was established under the Botswana

Power Corporation (BPC) Act of 1970 to produce and supply electricity throughout

Botswana, in a commercial manner. Until the amendment of the Electricity Supply Act in

December 2007, BPC had monopoly over the provision of electricity in Botswana. The

Corporation‟s corporate objective is to facilitate sustainable and diversified development

of our country by rendering quality electrical energy services that are affordable, efficient,

safe and environmentally prudent.

2.2 BPC has a electricity generation capacity of 132MW from the coal fired

Morupule Power Station located in Palapye, 280km from Gaborone. Currently, the Power

Station contributes about 30% of the country‟s electricity requirements and it augments

the remaining 70% through imports from neighboring countries, mainly Eskom and the

Southern African Power Pool (SAPP).

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2.3 BPC faces the challenge of ensuring that there will be adequate power supply

once its major supplier; Eskom reduces the power that it makes available to Botswana. In

addition, BPC faces challenges of attaining its commercial goals, due to low tariff rates, in

a bid to make Botswana competitive as an investment destination through the provision of

cost effective power supply.

2.4 BPC undertook a restructuring exercise, commencing in 2005, which resulted in

the unbundling of the previously vertically integrated organization into a structure of self

accounting Strategic Business Units (SBUs), to mitigate against the its challenges as well

as a step towards introducing private sector participation into BPC. The exercise was

completed in 2007. In addition, a feasibility study advising on the expansion of the Power

Station project to 1200MW was carried out in 2005 and the process to secure financing for

the project was subsequently pursued with the use of financial advisors. The project has

however, been scaled down to 600MW and is planned for completion in 2013. BPC‟s

current strategic agenda is focusing on securing power supply, financial recovery,

customer satisfaction and realizing the new SBU business model for the period 2008 to

2013.

2.5 Financially, BPC has consistently made operating losses for 3 consecutive years,

culminating with a loss of P86,8 million in 2007/8. It, however, has achieved net profit

during these years due to earnings from financial investments, which is not a sustainable

situation. Combined transmission and distribution losses are estimated at 12%, and every

1% is estimated at about P7 million loss. In addition, BPC sells electricity below the cost

of electricity imported which constitutes the bulk of power supplied to the local markets.

2.6 Other unfavorable factors include:-

a) The Increase in the cost of imports brought about by the depreciating of the Pula

against the Rand given that more than 80 percent of the national power requirements

are met through imports mainly from the Republic of South Africa.

b) Limited tariff increases due to the Government‟s quest to meet the diverse needs of

the economy.

c) A sharp increase by cost of imports especially of copper being a base metal and fuel

costs.

2.7 Under Botswana‟s Economic Diversification Strategy, the Ministry of Minerals

Energy and Water Resources has called for acceleration and expansion of utilities through

privatization or PPP of major infrastructure projects and that new power stations be built

and expansion of existing ones be carried out. In addition, there is a step towards

deregulation with MMEWR progressing the establishment of an Energy and Water

Regulator. This is in light of the various opportunities being considered in the energy

sector, including the following:-

a) Introduction of 250 MW Independent Power Producers (IPP) Projects to increase future

power supply

b) Provision of 80 MW Emergency Power Supply.

21

c) Establishment of the Westcor Project (Regional).

d) Implementation of a National Electricity Efficiency Campaign (NEEC)

2.8 Being cognizant that the Privatization Master Plan of 2005 envisaged that the

privatization of BPC should be considered after the restructuring of BPC into SBU‟s has

taken place, and given that the amendment the Energy Supply Act in 2007 now allows the

introduction of other independent power producers in the sector, MMEWR wishes to

consider possible opportunities for private sector participation in BPC, including through

various forms of privatization, that will enable it to operate and compete effectively in the

energy sector.

3 STRATEGIC OBJECTIVES

3.1 The Government strategic objectives for considering the involvement of the

private sector in BPC are:-

(i) Leveraging efficiency, increasing productivity and promoting

competitiveness through the involvement of private sectors service providers in

BPC,

(ii) Enhance the contribution of Electricity Supply Industry to the

economy by BPC serving as a catalyst and enabler to doing business in a cost

effective way and improve Botswana‟s competitiveness,

(iii) Reduce the Government‟s financial commitments and operational

involvement in undertaking and maintaining a constantly expanding energy

sector.

(iv) Enhanced investments in technology, machinery and equipment,

including modernization, in the generation, transmission, distribution and

customer service operations of BPC through innovation and cost effective

solutions

(v) Expanding the range of services and products as well as strengthening

of managerial capabilities.

4 OBJECTIVE OF THE ASSIGNMENT

4.1 The first objective of the assignment is to carry out a diagnostic study that will

assess possible opportunities and options and develop an optimal private sector

participation strategy through which the private sector can be involved in the operations of

and services provided by BPC to deliver on the Government‟s strategic options. This will

be done in line with the Privatization Policy of Botswana.

4.2 The second objective of this assignment is to provide training to PEEPA on core

privatization skills, using BPC‟s case as a support for both in-class and on-the-job

training.

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5 SCOPE OF WORK

5.1 The scope of work for the Advisor regarding the first objective will include

carrying out a diagnostic study that will inform the possible strategy for private sector

participation in BPC and will include, but not limited to:-

5.1.1 Carrying out as due diligence review of the Electricity Supply Industry

and business of BPC, including reviews on the:-

(i) legal and regulatory aspects covering the existing laws,

regulations, policies and processes governing the Electricity Supply

Industry and BPC,

(ii) technical, condition of assets and investment aspects of BPC

(iii) operations, production capacities, products and services as well as

the institutional structures and employment status, and the environment

within which BPC operates,

(iv) financial position and performance of BPC

5.1.2 Carrying out a full market analysis, which will include demand forecasting

and competitor analysis, and an assessment of the level of investor interest in

BPC.

5.1.3 Carrying out an asset and business valuation of BPC, using whatever

techniques are appropriate for the Electricity Supply Industry.

5.1.4 From the above, identify and assess available possible options for private

sector involvement in BPC and structured value propositions of a possible private

sector participation strategy. In addition, advise on and recommend, if

necessary:-

(i) Any restructuring activities for BPC that would be necessary to

prepare it for the proposed private sector participation strategy,

(ii) reforms (legislative, regulatory, institutional, etc) that will allow

for the optimal realization of private sector participation opportunities in

BPC, using the recommended strategy,

(iii) human resource issues and recommend necessary measures that

need to be put in place to minimize negative impact on workers,

(iv) other obstacles to the prescribed private sector participation

options/strategy.

5.1.5 The Advisor will present a draft private sector participation strategy for

BPC and facilitate a stakeholder consultation workshop to be organized by the

Government of Botswana.

5.2 The training component will cover all aspects of the project cycle, from due

diligence to options analysis and to the recommendation of implementation plans for

23

privatization transactions. In order to keep the focus on principles that can be generalized

from the BPC case, the training will focus on privatization in the infrastructure sector, in

particular divestiture, outsourcing, leasing and concessions.

5.2.1 The target group of the training will be the Management Team and

analysts, which comprises 15 persons. A preliminary skills audit is attached to

allow the Consultant to prepare a detailed training plan, to be submitted with the

offer.

5.2.2 The method, to be detailed by the Advisor, will be based on a mix of in-

class training on the principles, processes and project management, and on-the-job

training through direct participation of PEEPA staff in the key steps of the

transaction, with a view to apply on BPC and future projects, the knowledge

acquired in class. It is not expected that the Consultant will produce

comprehensive educational material for the training. However, the training could

rely on books available, which would be provided as part of the services. In

addition, the consultant is expected to produce a training manual comprising the

necessary case study material, presentations and exercises.

5.2.3 The training will be concluded by an examination, personal feedback to

each participant, and an overall feedback to the CEO of PEEPA. A training report

will summarize the outcomes of the training and recommend an action plan to

further build the skills base of PEEPA staff.

6 DELIVERABLES AND TIMEFRAME

6.1 The Advisor will commence by submitting an Inception Report which will

include, amongst other things, a detailed work plan for the strategy assignment and

envisaged training activities, and findings from initial stakeholder consultations.

6.2 The assignment will take a period of 18 weeks. The deliverables and an

indicative timetable is as follows:

Deliverables Time frame

From signature

Inception Report 2 weeks

Training manual 2 weeks

Due Diligence Report 10 weeks

Asset and Business Valuation Report 10 weeks

Draft Private Sector Participation Strategy for BPC 12 weeks

Stakeholder Workshop 15 weeks

Final Privatization strategy for BPC 18 weeks

Specific training activities From week 3 to15

Training report 18 weeks

24

6.3 The timetable may be modified subject to the approval of PEEPA and MMEWR

to cater for exigencies which might be identified by the PEEPA, the Advisor or MMEWR

during the assignment

7 COMPETENCY AND EXPERTISE REQUIREMENTS

7.1 The Advisor should be capable of undertaking the assignment. In assessing the

capability of the Advisor, consideration will be given to whether:-

7.1.1 the Advisor has the resources to carry out the assignment on a timely

basis.

7.1.2 the Advisor has the relevant professional expertise and experience to carry

out the assignment, including the experience of the individual consultants of

having carried out similar assignments before and the Advisor‟s performance in

connection with those assignments.

7.2 The Advisor shall propose a sufficient team that is appropriately qualified with

relevant experience for the project to ensure quality and completion within schedule. The

Diagnostic Review requires multidisciplinary analysis. Therefore, the Advisor must

endeavor to provide the range of expertise needs to address these issues. The composition

of key disciplines for the team required for the study are summarized below, with more

details in the ITT, Clause 10.5:

NATURE OF EXPERTISE MINIMUM QUALIFICATION/EXPERIENCE

1 Power Sector Economist –

team leader

Bachelor‟s degree in relevant economics

discipline.

15 years of post-qualification experience leading

transactions and with particular experience

advising on the structuring and implementation

of private sector participation strategies in, or

privatization or concessioning of electricity

companies.

2 Electricity Operations

specialist

Bachelor‟s degree in relevant discipline.

15 years of post-qualification experience in the

operations of electricity companies and with

particular experience advising on the

privatization or private sector participation

strategies for electricity companies

3 Financial/costing expert Master‟s degree in relevant finance discipline

10 years of post qualification experience in

costing and analyzing power sector projects, as

well as carrying out financial and business

valuations.

4 Electricity Engineering Expert Bachelor‟s degree in electrical or relevant

engineering discipline .

10 years of post-qualification experience

advising on power sector projects

5 Legal expert Bachelor‟s degree in Law.

25

7.3 The consultant is free to suggest alternatives for consideration by the Client. In

addition, the Advisor is encouraged to associate with local citizen firms and/or Batswana

by way of joint venture or sub-contracting arrangements.

8 REPORTING REQUIREMENTS

8.1 The Advisor will report to the Chief Executive Officer of PEEPA as the principal

representative on this assignment and will work closely with the staff of PEEPA, the

Ministry of Minerals, Energy and Water Resources and BPC. The Chief Executive Officer

of PEEPA will serve as the principal contact for the Advisor and through whom the

Advisor will receive all necessary approvals. A Reference Committee, comprising of key

stakeholders will be established by PEEPA, as a consultative forum, to review and

monitor deliverables of the assignment.

8.2 All reports, including any advisory documents submitted to the Client by the

Advisor will be in hard copy (5 copies) as well as in soft copy on CD ROMs (5 copies).

9 TENDER SUBMISSION

9.1 A tender submission shall comprise of two separate proposals, a “technical

proposal” and a “financial proposal” which shall be submitted in separate envelopes

clearly marked as specified in Section 3 Instruction to Tender. The technical proposal

shall include only the technical requirements responding to the terms of reference and

should not include any financial information relating to the price of the assignment.

9.2 The financial proposal should provide the expected total cost of the assignment

being the aggregate of the proposed fixed fee, reimbursable expenses and a proposed

success fee.

9.3 The financial proposals may be denominated in the Botswana Pula, South African

Rand or United States Dollar, however, the contracted sum will be converted into

Botswana Pula at the prevailing Pula exchange rate (mid-rate) at the tender submission

closing date for assessment purposes (Source of exchange rate will be the Bank of

Botswana).

10 years of post-qualification experience with

experience advising on energy sector projects

and privatization or private sector participation

projects in the energy sector.

6 Human Resources and

Organization Development

Specialist

Master‟s degree in Human Resources

Management/Organization Development or

relevant discipline. 10 years of post-qualification

experience in human resources restructuring,

development and change management.

26

10 CONFIDENTIALITY

10.1 The Advisor, its sub-contractors and personnel or either of them shall not either

during the term or after the termination of or expiration of this assignment, disclose any

proprietary or confidential information relating to the services, as well as the operations of

PEEPA, MMEWR and BPC and the Botswana Government, without PEEPA‟s prior

written consent.

11 PROPRIETARY INTERESTS

11.1 Proprietary interests on all materials and documents prepared by the Advisor

under this assignment shall become and remain the property of PEEPA and the

Government and cannot be used without PEEPA‟s prior approval.

27


PRIVATE SECTOR PARTICIPATION IN PROVISION OF MAINTENANCE

SERVICES TO GOVERNMENT BUILDINGS

1. BACKGROUND

1.1 The Department of Building and Engineering Services (DBES), under the Ministry of

Transport and Communications is charged on the development and maintenance of all

Government buildings. An exercise carried out in 2008 found Government had a total

number of 2,299 buildings (Tables 1 and 2).

Table 1: Government building by location

Central Region 430 (18.7%)

Gaborone Region 1,032 (44.9%)

North Region 314 (13.7%)

North West Region 134 (5.8%)

South Central Region 68 (3.0%)

South Region 321 (14.0%)

Total 2,299 (100%)

Source: DBES, 2008

Table 2: Government building by type

Residential 1,520 (66.1%)

Offices 499 (21.7%)

Schools 50 (2.2%)

Hospitals 34 (1.5%)

Police Station 29 (1.3%)

Colleges / Universities 27 (1.2%)

Other Types 140 (5.2%)

Total 2,299 (100%)

Source: DBES, 2008

1.2 Although hospitals (1.5%), schools (2.2%) and colleges/universities (1.2%) constituted a

small percentage of the overall figure, their maintenance requirements need substantial

budgets to support the size of the buildings and sophistication of technology involved

which supports business / public services.

1.3 The industry norm is that the average life cycle of a building is 25 years. After this a

revamp of the building is required to address refurbishment of structure and replacement

of hard service infrastructure. Buildings in the Central Region were found to have as

average 29 years old and as a result were viewed to be more problematic in terms of

condition of hard services. While this indicated a majority of the recorded buildings were

28

at an “established” stage and fast approaching or already at a stage where major repairs

and refurbishments are required to address maintenance and up keep, it was noticed that

one fifth of the buildings were 25 years or older. Maintenance regimes and plans are very

reactive and did not address future life cycle maintenance management. Also notice was

that in some regions that hard service infrastructure within 7 years and younger (“newer”)

are in a very poor - very bad state of repair. Also in other limited cases Secondary

Schools buildings had been vandalized and in a dilapidated state totally unfit for

occupation or use.

1.4 Maintenance, of which 89.4% is provided in-house by DBES staff, is budgeted at head

office for the annual cycle and is based on escalating the budget from the previous year

by an economic indicator and therefore falls short of addressing current maintenance

requirements, backlog of maintenance from previous cycles and emergency maintenance

contingencies. Maintenance is seen as non-core and therefore is seldom seen as an

important aspect when budgeting and forecasting. In addition, infrastructure is not

unattended to despite numerous requests from users due logistical and resourcing issues

and a lack of urgency to respond to calls or prioritize these maintenance requests.

1.5 As a result of limited cyclical maintenance, exacerbated by insufficient budgetary

allocations, limited human resources capacity at DBES and in-availability of spares and

training to repair sophisticated and specialised infrastructure equipment, a majority of

Government buildings have lacked civil maintenance and in some, conditions have

deteriorated to critical levels. Vandalism and abuse of structures has rendered many

buildings unsuitable for occupation and no measures are in place to curb such abuse.

DBES is in urgent need to improve and accelerate maintenance of Government buildings

to ensure it offers promptly reliable infrastructure accommodation. It requires to develop

and implement a more cost effective and efficient maintenance delivery methods,

involving private sector service providers, that will ensure infrastructure sustainability, as

a way of improving service delivery..

2. OBJECTIVE

2.1 The purpose of the assignment is to procure transaction advisory services to advise on

how best to structure Government buildings‟ maintenance delivery services and on the

selection of the private sector service provider to deliver suitable infrastructure

accommodation. Specific objectives of the assignment are to:

i) develop the most suitable and cost method that will support DBES in delivery of

maintenance services.

ii) procure a private sector service provider to deliver the maintenance in the most

efficient manner.

iii) Provide capacity build staff to project manage the structuring, development and

monitoring of private sector services delivery projects.

29

2.2 The assignment will be carried out in accordance with the Government of Botswana‟s

Privatization Policy which seeks to improve the efficiency, productivity and

competitiveness in delivery public sector infrastructure and services through the

involvement of the private sector.

3. TASKS

3.1. The Transaction Advisor will be required to:-

3.1.1. Undertake a comprehensive feasibility study or business case assessment and

recommend the most efficient and cost effective solution for delivery of the

maintenance services. This will include a project due diligence, a solutions

options analysis that takes into consideration technical, legal and financial issues

associated with project, an assessment of the availability and capabilities of the

private sector to deliver, relevant business valuations and NPVs including

development of a public sector comparator, and development of optimal private

sector delivery solution/option.

3.1.2. Undertake a risk assessment of all risk associated with the project, their

quantification and how the risks should be allocated to the parties that will best

manage/mitigate them.

3.1.3. Based on the above, develop a suitable delivery structure for the recommended

maintenance delivery option including innovative operational efficiencies that

may realistically be expected of the private sector party, the risk allocation,

project cost, payment and penalty mechanism. All assumptions must be clearly

stated.

3.1.4. Prepare a Project Implementation Plan

3.1.5. Prepare bidding documents including, amongst others, the scope of requisite

output specifications and expected service delivery standards, compliance

requirement, payment mechanism and a penalty deduction system and PPP or any

other contract to be signed for delivery of the project and relevant service level

agreements. The will be developed in accordance the Public Procurement and

Asset Disposal Board regulations.

3.1.6. Administer bidding process including preparation of a data room, arrange

necessary structured pre-bidding conferences and meetings, manage bidder

clarification and feedback, and manage evaluation process

3.1.7. Facilitate contract negotiations (commercial and legal), award and signing, and

financial closure

3.1.8. Develop Contract Management, Communication and Stakeholder Relationship

Plans and facilitate monitoring of project.

30

3.2. The Transaction Advisor will be required to develop and implement a training plan that

covers all technical and management aspects of the assignment, to ensure capacity

building of staff within PEEPA and DBES, to enable these entities acquire skills that can

adequately structure, monitor and manage similar future assignments

4. DELIVERABLES AND DURATION OF THE ASSIGNMENT

4.1. The Advisor will commence by submitting an Inception Report which will include,

amongst other things, a detailed work plan for the strategy assignment and envisaged

training activities, and findings from initial stakeholder consultations. The deliverables

will include the following:-

(i) An Inception Report,

(ii) Training Manual

(iii) A Feasibility Study and Risk Assessment Report on Government Building

Maintenance

(iv) Maintenance Delivery Options Report and Implementation Plan

(v) An Tender Documents and Relevant contracts,

(vi) Reports on of Pre-qualification, Bidding and Negotiation processes

(vii) Contract Management, Communication and Stakeholder Relationship Plans

(viii) Contract Completion Report

4.2. The assignment will take a period of 6 months. The indicative timetable for submission

of the deliverables by the Advisor is as follows:-


From signature


Training manual 2 weeks

Feasibility Study and Risk Assessment Reports 10 weeks

Options Report and Implementation Plan 12 weeks


Tender documents and Contracts 20 weeks

Prequalification Report 26 weeks

Bidding Process Report 38 weeks

Negotiations Report 44 weeks

Contract Management, Communication and Stakeholder

Relationship Plans

48 weeks

Specific training activities From week 3 to48

Contract Completion and Training reports 52 weeks

31

4.3. The timetable may be modified subject to the approval of PEEPA and DBES to cater for

exigencies which might be identified by the PEEPA, the Advisor or the Ministry during

the assignment

5. COMPETENCY AND EXPERTISE

5.1. The Transaction Advisor should comprise a team, managed by a single Lead Advisor

who should have relevant experiences of leading a similar assignment.

5.1.1. The skills and experience required in the transaction advisory team are as

follows:-

Engineering with project management qualification as well as relevant

project structuring and contract management expertise,

Financial analysis, with relevant corporate or project finance structuring

experience;

Engineering with specific in infrastructure management, maintenance and

monitoring,

Legal, with relevant experience in risk allocation, contract drafting and

negotiations.

5.1.2. The Lead Advisor will be held accountable, in terms of the Contract, for ensuring

project deliverables and the professional conduct and integrity of the team.

5.1.3. The Transaction Advisor is free to suggest alternatives for consideration by the

Client. In addition, the Advisor is encouraged to associate with local citizen firms

and/or Batswana by way of joint venture or sub-contracting arrangements.

6. REPORTING REQUIREMENTS

6.1. The Advisor will report to the Chief Executive Officer of PEEPA as the principal

representative on this assignment and will work closely with the staff of PEEPA, the

DBES and the Ministry of Transport and Communications. The Chief Executive Officer

of PEEPA will serve as the principal contact for the Advisor and through whom the

Advisor will receive all necessary approvals. A Reference Committee, comprising of key

stakeholders will be established by PEEPA, as a consultative forum, to review and

monitor deliverables of the assignment.

6.2. All reports, including any advisory documents submitted to the Client by the Advisor will

be in hard copy (5 copies) as well as in soft copy on CD ROMs (5 copies).

7. TENDER SUBMISSION

7.1. A tender submission shall comprise of two separate proposals, a “technical proposal” and

a “financial proposal” which shall be submitted in separate envelopes clearly marked as

specified in Section 3 Instruction to Tender. The technical proposal shall include only

32

the technical requirements responding to the terms of reference and should not include

any financial information relating to the price of the assignment.

7.2. The financial proposal should provide the expected total cost of the assignment being the

aggregate of the proposed fixed fee, reimbursable expenses and a proposed success fee.

7.3. The financial proposals may be denominated in the Botswana Pula, South African Rand

or United States Dollar, however, the contracted sum will be converted into Botswana

Pula at the prevailing Pula exchange rate (mid-rate) at the tender submission closing date

for assessment purposes (Source of exchange rate will be the Bank of Botswana).

8. CONFIDENTIALITY

8.1. The Advisor, its sub-contractors and personnel or either of them shall not either during

the term or after the termination of or expiration of this assignment, disclose any

proprietary or confidential information relating to the services, as well as the operations

of PEEPA, DBES, the Ministry of Transport and Communications and the Botswana

Government, without PEEPA‟s prior written consent.

9. PROPRIETARY INTERESTS

9.1. Proprietary interests on all materials and documents prepared by the Advisor under this

assignment shall become and remain the property of PEEPA and the Government and

cannot be used without PEEPA‟s prior approval.

33


CONSULTANCY SERVICE FOR THE FORMULATION OF A STRATEGY AND

POLICY TO ENHANCE CITIZEN ECONOMIC EMPOWERMENT THROUGH

PRIVATIZATION

1. BACKGROUND

1.1. One of the key objectives the Privatization Policy for Botswana (Government Paper no. 1 of

2000) is to promote the participation of citizens in the economy by increasing the opportunities

for Batswana to own productive assets arising from the privatization program. This is in line with

the Government‟s high level long term vision strategy (Vision 2016) through which it has

committed itself to finding “concrete strategies to ensure citizen empowerment and to maximize

the participation of citizen owned companies in the economy”.

1.2. The Privatization Policy for Botswana highlights the main measures that will be used to empower

citizens during the process of privatization. These include:

(i) Promoting share-holding by citizens in share offerings of public enterprises

(ii) Using pension and other funds (e.g. unit trusts) to buy shares for the benefit of

members, special access to shares by management and employees of privatised

entities

(iii) Provide special advice and assistance in organising employee and management

buy-outs.

(iv) Educating Batswana on how to empower themselves through training and

development of managerial and entrepreneurial skills.

1.3. To encourage citizen participation in share ownership, Government has already committed itself

to several policy initiatives which are set out in the Privatization Policy, for Botswana, including:

(i) The size of the share purchases required to participate in IPOs will be low enough

to attract as many citizen buyers as commercially feasible

(ii) The Government will set up an Investment Trust Fund to purchase a certain

percentage of shares of privatised enterprises on behalf of citizens

(iii) The Government will extend the Small, Medium and Micro Enterprises (SMME)

or its successor CEDA “credit scheme” to small citizen investors to facilitate

citizen ownership of privatised enterprises

(iv) The management buy-outs as means of transferring ownership to management and

employees will be encouraged

(v) Appropriate technical assistance and training arrangements will be provided to

management and employees for implementing buy-out transactions

(vi) Existing empowerment schemes will be reviewed and used to enable citizen

participation in ownership of shares of privatised entities

1.4. To ensure accelerated deal flow as well as for PEEPA effectively deliver on its mandate of

advising and leading implementation of transactions, there is need to, amongst other things,

develop a Citizen Economic Empowerment Strategy Framework that will identify new measures

and initiatives to guide empowerment within the ambit of the Privatization Policy, as well as

34

provide guidelines to guide the approach and manner of facilitating meaningful participation of

citizens in privatization transactions.

2. OVERALL OBJECTIVE

2.1. Develop a comprehensive citizen economic empowerment strategy and guidelines to be used and

applied during the privatization transaction process, which be carried out through the divestiture

of public entities and assets, public service contracting out initiatives as well as in the provision

of infrastructure and services by means of public private partnership methods.

3. SCOPE OF WORK

3.1. To ensure citizen participation of in privatization transactions on a sustainable basis, the Expert is

required, but not limited to:

(i) Review the existing policy environment for citizen economic empowerment

through privatization, identify and recommend changes to the current support

policies and measures as well as recommend new measures to achieve the

objectives of citizen empowerment as it relates to privatization.

(ii) Develop entrepreneurial development principals, methods and guidelines that will

result in successful citizen businesses and broaden the ownership base through

privatization. These should include empowerment mechanism for employees of

public enterprises that are to be privatised and staff of Government departments

whose services will be contracted out, such management and employee buy-outs,

ESOPs and participation of employees in public services which have/are to be

contracted out. The guidelines should include any prerequisites including capacity

initiatives that will be require that would be required to give effect to the

recommended methods.

(iii) Design investment vehicles that are attractive and affordable to the general public

to encourage wider participation by the public and broaden ownership of

companies by citizens. This will include review of the initiatives which are

highlighted in the Privatization Policy to encourage citizen participation and

empowerment.

(iv) Structure and recommend financing strategies for supporting empowerment

transactions following a review of the existing procurement requirements as well

as financing institutions and Government empowerment schemes and programs.

(v) Make recommendations on training, skills development and transfer programs for

the private sector, which may be deemed necessary to support privatization, as

well as a mentorship program that will be required to ensure the success of citizen

businesses after privatization. Identify opportunities for technical assistance to

finance training and workshop costs for capacity building of citizen investors.

(vi) Recommend necessary employee support programs and a social safety net to be

implemented during privatization.

(vii) Develop an advocacy for citizen economic empowerment that will strengthen

and/or integrate business associations and organisations as well as to build

capacity amongst communities and civil society structures

35

3.2. Based on the above the Expert will develop and present a draft strategy framework report laying

out the principals for providing opportunities for citizens and citizen entreprenuers and businesses

participation during privatization as well as conditions and guidelines to ensure that the economic

benefits outweigh the cost of distortion resulting from this market intervention.

4. DELIVERABLES AND TIMEFRAME

4.1. The Expert will commence by submitting an Inception Report which will include findings from

initial stakeholder consultations and detailed work plan for the strategy assignment. The

deliverables will include the following:-

(ix) An Inception Report,

(x) A Draft Citizen Economic Empowerment Report

(xi) A final Citizen Economic Empowerment Report

4.2. The assignment will take a period of 12 weeks. The indicative timetable for submission of the

deliverables by the Advisor is as follows:-


From signature


Draft Citizen Economic Empowerment Report 8 weeks


Final Citizen Economic Empowerment Report 12 weeks

4.3. The timetable may be modified subject to the approval of PEEPA to cater for exigencies which

might be identified by the PEEPA and the Expert during the assignment

5. COMPETENCY AND EXPERTISE REQUIREMENTS

5.1. Masters degree is required, preferably in business administration or private sector development

with a minimum of ten years of relevant experience in formulating similar citizen empowerment

policies or strategies and guidelines, private sector review and analysis and private sector capacity

building. Experience in privatization and project management in the Africa region is an added

advantage.

6. REPORTING REQUIREMENTS

6.1. The Expert will report to the Chief Executive Officer of PEEPA as the principal representative on

this assignment and will work closely with the staff of PEEPA. The Chief Executive Officer of

PEEPA will serve as the principal contact for the Advisor and through whom the Advisor will

receive all necessary approvals. A Reference Committee, comprising of key stakeholders will be

established by PEEPA, as a consultative forum, to review and monitor deliverables of the

assignment.

36

6.2. All reports, including any advisory documents submitted to the Client by the Advisor will be in

hard copy (5 copies) as well as in soft copy on CD ROMs (5 copies).

7. TENDER SUBMISSION

7.1. A tender submission shall comprise of two separate proposals, a “technical proposal” and a

“financial proposal” which shall be submitted in separate envelopes clearly marked as specified

in Section 3 Instruction to Tender. The technical proposal shall include only the technical

requirements responding to the terms of reference and should not include any financial

information relating to the price of the assignment.

7.2. The financial proposal should provide the expected total cost of the assignment being the

aggregate of the proposed fixed fee, reimbursable expenses and a proposed success fee.

7.3. The financial proposals may be denominated in the Botswana Pula, South African Rand or United

States Dollar, however, the contracted sum will be converted into Botswana Pula at the prevailing

Pula exchange rate (mid-rate) at the tender submission closing date for assessment purposes

(Source of exchange rate will be the Bank of Botswana).

8. CONFIDENTIALITY

8.1. The Advisor, its sub-contractors and personnel or either of them shall not either during the term

or after the termination of or expiration of this assignment, disclose any proprietary or

confidential information relating to the services, as well as the operations of PEEPA and the

Botswana Government, without PEEPA‟s prior written consent.

9. PROPRIETARY INTERESTS

9.1. Proprietary interests on all materials and documents prepared by the Advisor under this

assignment shall become and remain the property of PEEPA and the Government and cannot be

used without PEEPA‟s prior approval.

37

Annex 6 – DETAILED WORK PLAN (INDICATIVE)

Activity Who

9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

Project preparation (incl. procurement)

Submission to AfDB Board and Approval PEEPA / AfDB

Tendering for consulting firms A, B and C PEEPA

Final selection of consulting firms A, B and C PEEPA / AfDB

Privatization strategy for BPC and training

Inception report Consulting firm A

Due diligence and training Consulting firm A

Asset and Business Valuation and training Consulting firm A

Options analysis Consulting firm A

Stakeholder Workshop Consulting firm A

Final privatization strategy Consulting firm A

Training on due diligence and options analysis for infrastructure companies Consulting firm A

Privatization strategy and tendering documents for Government buildings, schools and hospitals and training

Inception report Consulting firm B

Due diligence and training Consulting firm B

Asset and Business Valuation and training Consulting firm B

Options analysis Consulting firm B

Stakeholder Workshop Consulting firm B

Final privatization strategy Consulting firm B

Evaluation of the strategy by Cabinet Govt Botswana

Preparation of tender documents Consulting firm B

Request for proposal Consulting firm B

Evaluation of offers Consulting firm B

Training on due diligence, options analysis, tendering for public buildings Consulting firm B

Policy for Citizen economic empowerment

Inception report Consulting firm C

Diagnostic Consulting firm C

Interim report Consulting firm C

Preparation of draft report and first draft law for citizen economic empowerment Consulting firm C

Consultative workshop Consulting firm C

Preparation of final report and final draft law for citizen economic empowerment Consulting firm C

Secondment of staff

Implementation of the secondment program PEEPA

2010 2011 2012

38

Annex 7 – PEEPA ORGANIZATIONAL STRUCTURE

39

Annex 8 - Preliminary skills audit (Summary)

Preliminary skills audit - Summary

Years of

experience with

PEEPA

Total years of

experience in

the private

sector

Total years of

experience in

the public

sector

(excluding

PEEPA and

parastatal)

Total years of

experience in a

parastatal

(excluding

PEEPA)

Years of

experience in

Privatisation

outside

PEEPA[1]

Total years

of

experience

All inclusive

Management

Total years of experience 20 19 36 70 19

Average years of experience 3 2 5 9 2 18

Operations staff (excluding corporate services)

Total years of experience 11 24 0 19 1

Average years of experience 2 3 0 3 0 8

40

Annex 9 - Preliminary skills audit (Detailed Table) Department Highest degrees First Degree, diploma or

certificate

Years of

experience with

PEEPA

Total years of

experience in

the private

sector

Total years of

experience in

the public

sector

(excluding

PEEPA and

parastatal)

Total years of

experience in a

parastatal

(excluding

PEEPA)

Years of

experience in

Privatisation

outside

PEEPA[1]

1

Deputy CEO MBA B.Com (Accounting, Finance

& Mgt) 2.5 0 0 20 0

Core DepartmentsPrivatisation and

Restructuring

2 Manager MBA BCom (Finance) 8 6 13 6

3

Manager MBA Financial Mgt

Doctorate: Fin Dev, Fin

Structure & Economic

Growth

BA Economics & Stats

1.5 0 1 14 0

Performance Monitoring

4

Head, MSc Economics & Finance BA Economics; PGD

Economics 7 0 0 6 1

5

Manager BA Economics & Industrial

Psychology 1 1 0 15 2

Public Services Outsourcing

6 Head MBA BSc Physics 0.5 13 24 10

7

Manager MBA Business Finance &

Administrative Studies

BCom Accounting & Mgt

1 4.5 5 10

8

Manager MBA Supply Chain Mg) BCom; Graduate PGD

Purchasing & Supply 1 0 12

Analyst

9

Analyst 1 MCom Economics BCom (Honours) Economics;

BA Social Sciences (Econ &

Stats) 3 0 13 0

10

Analyst 2 BA Business Science (Finance

& Economics) 2.5 2 0 0

11

Analyst 3 ) BSc Finance (Economics &

Risk Mgt 0.5 3 0 1

12

Analyst 4 BBA Marketing ,PGD

Purchasing & Supply 1.5 4 0 1 0

13

Analyst 5 Masters Electronic &

Computer Engineering

BEng (Hons) Computer

Engineering; Prince2

Practitioner 1.5 5 0 0

14

Analyst 6 CIMA BCom Business Systems

Implementation & Electronic

Commerce Mgt 1 5 0 3

15

Analyst 7 Advanced Diploma in

Computers, Certificate in

Project Mgt & Business Mgt 1 5 0 1.5 0

Corporate Services

Departments

16 Manager, IT MBA BSc Computer Science 1.5 8 2 0

17

Database & Network

Administrator

Advanced Diploma

Computer Studies 1 6 0 0

18

Manager, Information

Resource Centre

Master s Library & Info

Studies

BA Humanities; PGD in

Library & Info Studies 6 1 11 0

19

Library & Records Officer Diploma in Library & Info

Studies 4 0 10 0

20

Manager, HR Masters Organizational &

Clinical Psychology

Bsc Psychology

2.5 2 2 5 0

21 HR Practitioner BA Humanities 0 1 2 0 0

22

Manager, Finance &

Administration

ACCA BCom Accounting

2 3 5 11 0

23

Assistant Manager, Finance

& Administration

CIMA AAT

2 1.5 1.5 0

24 Accounts Officer AAT 2 5 0 0

25

Principal Communications

Manager

Masters Mass

Communications

BA Social Work

0.5 2 5 11

26

Manager, Communications

& Public Education

BA in Visual Comms(Fine

Arts) 2 9 1

27 General Corporate Counsel Masters Law LLB 0 0.5 15 0.5 0

28 Administration Officer 0 0 7 0 1 4 0

29 Divisional Secretary1 Diploma in Secretarial 5 6 7 0

30 Divisional Secretary2 Diploma in Secretarial 4 9 0 0

31 Divisional Secretary3 Adv. Certificate Secretarial 1.5 0 17 0

32 Receptionist 0 0 2 8 0 0

33

Office

Assistant/Driver/Messenger

0 0

1.5 3 0 0

[1] Years experience in privatization, outsourcing or PPP outside of PEEPA (either on the private sector side, in projects and operations involving a privatized company, outsourcing or a PPP, or on the public side, for instance regulating a PPP or implementing a privatization)

41

Annex 10 - Project Procurement Arrangements

Project Categories

ICB NCB Other* Short List Non-Bank-

Funded

Total

1. Goods N/A N/A N/A N/A N/A N/A

2. Service Contracts N/A N/A N/A N/A N/A N/A

2.1 publications

3. Consulting Services N/A N/A N/A N/A N/A N/A

3.1 Studies and Engineering N/A N/A N/A N/A N/A N/A

3.2 Technical Assistance

Privatization strategy for BPC and training 260,000 260,000

Privatization strategy and tendering documents for

Government buildings, schools and hospitals and training

160,000 160,000

Policy for Citizen economic empowerment 60,000 60,000

Secondment of staff to an experienced sister privatization

agency 76,000 32,000

108,000

4. Training

5. Miscellaneous 44,000 44,000

TOTAL 0 0 120,000 480,000 32,000 632,000

* Other may be National Shopping, Direct Purchase.

Figures in italic are amounts financed by the Bank Group.

[ in UA]

42

Annex 11 - Privatization transactions’ status

TRANSACTIONS COMPLETED AT PEEPA LEVEL

Transactions Update

1. Privatization of Air

Botswana

Structuring of transaction and negotiations with a potential equity partner were

completed in June 2007, however, Government decided to recapitalize and

restructure the company first before further consideration of its privatization.

2. Botswana Vaccine

Institute

Process, which was intended to raise funding for the expansion of the vaccine

making facility, involved issuing of redeemable preference shares worth P50m; bond

issue of P70m; term debt of P15m, all of which was completed end of 2008

3. GEMVAS and

GLIF

Structuring and completion of transaction that offered the administration of

GEMVAS, an insurance scheme to the private sector was completed in December

2009.

4. Strategy For

National Development

Bank (NDB)

Development of privatization strategy that includes a transaction structure and

implementation plan to guide in the privatization of the National Development Bank

(NDB) was completed and submitted to Government for consideration in October

2009

5. Office

Accommodation for

Office of the

Ombudsman and Land

Tribunal

The PPP Project was completed by the private sector partner and handed over, for

Government use, in February 2008

TRANSACTIONS ON-GOING

Transactions Update

6. Privatization of

Botswana Telecom

Corporation (BTC)

A transaction structure has been approved in May 2010. Implementation timelines

envisage completion of transaction during 2011/12.

7. Privatization Of

Banyana Pty Limited

(BPL)

Government approved, in April 2009, the restructuring of BPL, which involves the

privatization, via leasing, of 97,000hectares of the Ranch to commercial farmers to

obtain value from the Ranch and BPL retaining 52,000hectares to operate its

ranching mandate. A feasibility assessment and development of leasing structures

were completed in March 2010, for Government consideration. Implementation is

envisaged to be completed during 2010/2011

8. Privatization of

Seed Production

Development of a strategy for the privatization of the seed production function in the

Department of Agricultural Research was completed in April 2010. Implementation

is envisaged to be completed during 2011/2012.

9. Serviced Office

Accommodation

for: Environment,

Wildlife &Tourism

and Lands &

Housing (MLH)

Transaction structuring and negotiations for the award of a concession to a private

sector service provider, was completed in December 2008. However, due to costs

concerns by Government, the project scope is being reviewed, for possible re-

negotiation or re-tendering.

10. Botswana

International

University Of

Science &

Technology

The project comprises of the design, financing and implementation of the best option

involving the private sector in the delivery of the BIUST campus infrastructure. The

tender process for securing a private sector service provider(s) is on-going and

financial closure is envisaged in the fourth quarter of 2010/11.

11. Outsourcing of the

Management of

Government Fleet

by Central

Transport

Organisation (CTO)

A diagnostic review to advise on the most cost effective and efficient option for the

provision of vehicle fleet management services to Government Ministries and its

departments, currently being provided by the Central Transport Organisation (CTO)

was completed in April 2008. Recommendations are being processed for

consideration by Government.

12. Outsourcing of Fuel

Operations for CTO

Vehicles

An assessment that will recommend an optimal solution for provision of fuel to

Government vehicles more efficiently is to be completed during 2010/11.

13. BMC Pre-

Feasibility Review.

A pre-feasibility review to advise on the readiness of BMC‟s privatization, is at an

advanced stage.

Source: PEEPA

43

Annex 12 - Botswana – African Development Bank active portfolio

Annex I: Ongoing Projects as at 31

March 2010

Pandamatenga Agirculture

Infrastructure Project ADB 2008 38.6

MIC capacity Building for the Ministry

of Agriculture MIC 2007 0.29

AWF-Watercontrol and Management

system AWF 2007 1.08

Economic Diversif ication Support

Loan ADB 2009 949.19

MIC-Corporate Governance Code MIC 2007 0.15

Institutional strengthening of local

authorities MIC 2008 0.28

Vision 2016 MIC 2008 0.25

Support for Education Quality MIC 2010 0.6

Kanzangula Bridge (Multinational) MIC 2007 0.6

Kanzangula Bridge (Multinational) IPPF 2006 1.45

Morupule"B" Pow er Transmission

Project ADB 2009 139.9

Solar Energy Project MIC 2009 0.6

Total 1,132.99

Project Title Window

Approved

Amount

(MillionUA)

Year

approved

44

Annex 13 - Botswana - Country Profile

Africa

Year Value

Social

Population, mid-year (millions) 2008 1.9 986 5523

Population growth (annual) (%) 2008 1.5 2.3 1.4

GNI per capita (Atlas method, US$) 2008 6,470 1,428 2,405

Urban population (% of total population) 2008 60.0 39.1 44.2

Life expectancy at birth (years) 2008 54.4 54.5 65.7

Infant mortality (per 1,000 live births) 2008 36.5 83.9 53.1

Child malnutrition (% of children under 5) 2004 5.9 130.2 80.8

Access to an improved water source (% of population) 2006 96.0 68.0 62.0

Illiteracy (% of population age 15+) 2007 82.9 38.0 21.0

Gross primary enrollment (% of school-age population)

Male 2005 107.5 101.7 112.0

Female 2005 106.0 92.1 103.0

Human Development Index 2007 0.694 0.514 0.679

Macroeconomic indicators 1990 2000 2006 2007 2008

GDP (US$ billions) 3.4 5.6 11.3 12.3 13.4

Real GDP Growth Rate (%) 5.5 4.1 5.1 4.4 2.8

Real Per Capita GDP Growth Rate (%) 2.5 2.3 3.7 2.9 1.3

Gross capital formation (% of GDP) 38.8 31.8 24.0 25.9 32.6

Gross national savings (% of GDP) 48.6 38.9 48.2 49.1 51.4

Inflation (%) 11.0 8.5 11.6 7.1 12.6

Growth of Money Supply, M2 (%) -14.0 1.4 67.4 31.2 21.1

Export Growth of Goods, volume (%) 11.4 2.3 2.5 5.0 -15.1

Import Growth of Goods, volume (%) -13.1 -8.1 -4.7 24.6 11.4

Terms of Trade (%) -29.8 -4.4 -2.9 0.2 -1.2

Debt Service (% of Exports of G&S) 11.6 18.5 16.8 16.6 7.2

Current Account (% of GDP) -0.5 9.7 17.2 14.3 7.0

Total external debt (% of GDP) 18.6 42.2 12.5 10.2 9.3

Average exchange rate (National Currency Per US $) 1.860 5.102 5.837 6.139 6.827

Reserves including gold (US$ millions) 3,331.5 6,318.2 7,992.4 9,789.7 9,118.6

Reserves (months of imports of goods & services) 20.1 32.6 27.7 26.3 19.4

STRUCTURE of the ECONOMY

By sector (% of GDP)

Agriculture 4.9 2.4 1.8 1.7 1.8

Industry 61.2 52.8 48.8 49.1 49.6

Manufacturing 5.2 4.4 3.3 3.2 3.2

Services 33.9 44.8 49.4 49.2 48.6

By sector (Annual growth rate)

Agriculture 3.6 -11.5 -1.2 1.1 1.1

Industry 0.3 10.8 -1.5 4.7 4.7

Manufacturing 4.8 3.5 -0.9 -0.9 -0.8

Services 15.9 4.5 7.5 5.9 4.2

Botswana

Botswana - Country Profile

Most Recent Year

Developing countries

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

GNI Per Capita, Current US $

Botswana Africa

45 50 55

2000

2001

2002

2003

2004

2005

2006

2007

2008

Life Expectancy at Birth (Years)

0.0

1.0

2.0

3.04.0

5.0

6.0

7.08.0

9.010.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

Real GDP Growth Rates, (%)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

CPI, Inflation, (%)

46

Annex 14 - Map of Botswana

Botwsana - MIC Grant to Support PEEPA in Improving …€¦ · · 2014-07-02CEO Chief Executive...

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